PARIS: European stocks inched higher on Monday, reversing early losses as comments from a top Federal Reserve official gave some support to those hoping for a fresh round of US stimulus to prop up the economy.
Chicago Federal Reserve Bank President Charles Evans said in remarks prepared for delivery at the Hong Kong Bankers' Club that the Fed should launch a fresh round of monetary stimulus immediately, buying bonds for as long as it takes to produce a steady decline in the jobless rate.
The euro zone's blue chip Euro STOXX 50 index was up 0.4 percent at 2,443.91 points, after bouncing off a key support level, the trendline formed by its 2011 and 2012 peaks.
Volumes remained low, however, with UK markets closed for a holiday.
"People have been focusing on the prospect of ...the ECB (and the Federal Reserve) buying bonds, but at the end of the day, I seriously doubt these measures will have a significant impact on the real economy," a Paris-based equities and exchange-traded fund trader said.
"The systemic risks have somewhat abated, which explains the summer rally. But beyond that, stocks won't move higher unless things improve on the macro front."
The Euro STOXX 50 gained nearly 16 percent after ECB President Mario Draghi said in late July he was ready to do whatever it took to preserve the euro, sparking expectations the central bank would start buying Spanish and Italian bonds to lower the two countries' high borrowing costs.
The index retreated last week, though its bounce off the 23.6 percent Fibonacci retracement of its summer rally, at 2,411.08 points, suggested renewed gains were possible.
AWAITING JACKSON HOLE
Nokia, the world's No 2 cellphone maker, surged 11 percent, boosted by bigger rival Samsung Electronics's loss in a costly court case against Apple.
A US jury found the South Korean company had copied critical features of the iPhone and iPad and awarded the US company $1.05 billion in damages.
Nokia and its software partner Microsoft have been struggling to compete against Samsung's market-leading Android-powered smartphones.
European stocks were expected to remain rangebound before the annual meeting of central bankers at Jackson Hole, Wyoming that starts on Friday. US Federal Chairman Ben Bernanke has used previous such gatherings to signal further policy easing.
Investors also awaited details of the ECB bond-buying plan.
Eric Galiegue, head of Paris-based financial research firm Valquant, said any new round of Fed easing would not be a silver bullet and that stocks might have got ahead of themselves.
"Monetary policy easing is becoming less effective while global growth is stalling, which is darkening the outlook for 2013 for the world economy," he said.
"The slump in exports in Japan, Taiwan and Korea in July underscore the risk of a global recession despite the loose monetary policies."
THIN VOLUMES
Germany's DAX index was up 0.3 percent, France's CAC 40 up 0.2 percent and Italy's FTSE MIB up 0.7 percent.
Equity derivative markets signalled further gains, with the most in-demand call strike on the September Euro STOXX 50 at 2,600 points, or around 7 percent above the actual market level, according to Societe Generale analysts.
By the end of trade on Friday, the put-call ratio on the E-STOXX 50 was at 0.86, indicating more calls were traded than puts. A ratio below 1 usually signals bullishness.
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